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Nathan deposited $4,500 into a savings account that pays 8% annual
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30 Oct 2023, 01:30
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Nathan deposited $4,500 into a savings account that pays 8% annual interest, compounded quarterly. Which of the following is the best approximation of the interest he will earn in one year if he does not make any further deposits or withdrawals from this account?
A. $360
B. $371
C. $752
D. $1,083
E. $1,445
A. $360
B. $371
C. $752
D. $1,083
E. $1,445
Re: Nathan deposited $4,500 into a savings account that pays 8% annual
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30 Oct 2023, 03:19
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If there were no compounding, then it would have been 8% of 4500, which is 360.
Since there is quarterly computing answer should be slightly more than 360. So, the answer is 371, B
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Since there is quarterly computing answer should be slightly more than 360. So, the answer is 371, B
Posted from my mobile device
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Nathan deposited $4,500 into a savings account that pays 8% annual
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Updated on: 30 Oct 2023, 03:48
2
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Bunuel wrote:
Nathan deposited $4,500 into a savings account that pays 8% annual interest, compounded quarterly. Which of the following is the best approximation of the interest he will earn in one year if he does not make any further deposits or withdrawals from this account?
A. $360
B. $371
C. $752
D. $1,083
E. $1,445
A. $360
B. $371
C. $752
D. $1,083
E. $1,445
OA IS B
We know the formula of CI = P\((1+R/N)^T\) - P
R = Rate
N = 4 ( Since interest is compounded Quarterly)
T=4 ( 1 year = 4 quarter)
CI = 4500\((1+8/4)^4\) - 4500
= 4500\((1+2/100)^4\) -4500
= 4500\((102/100)^4\) - 4500
= 4500(\(1.02^4\) -1) -- Always remember some basic exponent (1.02 ^ 4 ~ 1.082)
= 4500 * 0.082
= 369 ~371
Originally posted by VivekPrateek on 30 Oct 2023, 03:01.
Last edited by VivekPrateek on 30 Oct 2023, 03:48, edited 1 time in total.
Last edited by VivekPrateek on 30 Oct 2023, 03:48, edited 1 time in total.